Test your basic knowledge |

AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Entry of new firms shifts the cost curves for all firms upward






2. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






3. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






4. The sum of consumer surplus and producer surplus






5. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






6. A good for which higher income decreases demand






7. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






8. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






9. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






10. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






11. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






12. Es = (%dQs) / (%dPrice)






13. Ed = (%dQd)/(%dP). Ignore negative sign






14. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






15. Ed = 8 - infinite change in demand to price change






16. TR = P * Qd






17. The additional cost incurred from the consumption of the next unit of a good or a service






18. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






19. The price of a good measured in units of currency






20. A good for which higher income increases demand






21. The total quantity - or total output of a good produced at each quantity of labor employed






22. Costs that change with the level of output. If output is zero - so are TVCs.






23. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






24. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






25. Exists at the point where the quantity supplied equals the quantity demanded






26. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






27. Ei = (%dQd good X)/(%d Income)






28. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






29. AVC = TVC/Q






30. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






31. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






32. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






33. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






34. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






35. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






36. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






37. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






38. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






39. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






40. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






41. A firm that has market power in the factor market (a wage-setter)






42. The change in quantity demanded resulting from a change in the price of one good relative to other goods






43. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






44. Product demand - productivity - prices of other resources - and complementary resources






45. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






46. Total product divided by labor employed. APL = TPL/L






47. Ed < 1






48. Entry of new firms shifts the cost curves for all firms downward






49. The lost net benefit to society caused by a movement away from the competitive market equilibrium






50. Exists if a producer can produce a good at lower opportunity cost than all other producers